That’s an outstanding 40 per cent of the global workforce. But despite the huge anticipated growth in this emergent labour force, there continue to be questions and concerns over how to ensure the best interests of the workers.
From working hours, to pay, to tax issues – the “right” approach to dealing with the unprecedented rise of this new breed of worker is proving difficult for many systems to handle.
The confusion lies in the fact that these on-demand workers are an obscure mix of employee and business owner. While a portion of profits goes to the digital service provider, the “employee” is often required to make the upfront investment of eg. a car, and cover ongoing costs, such as food to be delivered, or fuel.
As such, traditional infrastructures are struggling to keep up. At APS financial, we have been approached by a number of workers in this space, who have been denied basic business bank accounts by traditional providers.
Why are banks refusing to acknowledge on-demand workers?
After the financial crisis in 2007/2008, the banks closed financial facilities for many individuals and freelancers and sole traders were one of the groups to suffer. As loans to poor-quality borrowers were identified as a key trigger for the crash, financial institutions were forced to tighten regulations and checks to make sure that a similar situation wouldn’t occur again.
The result is a set of restrictive credit and quality checking procedures, which include denying bank accounts to those with a limited trading history – a catch 22 for those setting up with an on-demand service for the first time.
Read more about on-demand businesses:
- Uber’s unhappy with TfL plans for English exams – and is asking users to help stop it
- Deliveroo guzzles $275m Series E investment – more than all three 2015 rounds combined
- Birmingham firm’s reminder service wins Uber investment and Travis Kalanick strategy
With banks barely able to meet the needs of sole traders (a group which makes up 60 per cent of the UK’s private businesses), it’s no surprise they’re proving slow to adapt to the changing nature of the workforce.
As banking facilities continue to fail to meet the needs of this expanding group, many on-demand workers left with no choice but to merge personal and business incomes. This can result in mismanagement of funds and create significant finance and regulatory compliance problems in the future – leaving these workers vulnerable to fines.
A range of alternative financial solutions have emerged over the last few years, which have the flexibility to consider each applicant individually and understand that each business is unique in its needs.
With this flexibility, they are able to expand the range of eligibility criteria beyond a simple view of credit history, meaning that accessing a business bank account, and even a pre-paid card for services such as fuel, is no longer out of reach.
The ecosystem to support the emerging on-demand network is becoming more accessible and hassle free – if you look in the right places. Workers that rely on disruptive technology platforms, should likewise look to emerging technology alternatives for their financial needs.
Rich Wagner is the CEO and founder of APS financial
The on-demand trend shows now signs of slowing, as Deliveroo secured its largest partnership to date this year.
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